Banks and financial institutions and firms in the oil and gas sector have been excluded from this analysis. These non-bank, non-oil firms have been further divided into three categories based on the size of their revenue. The same companies have been tracked for the past five quarters.

The chart shows that operating profit has declined in the aggregate for the smallest firms for over a year.

Also, taken together, their interest cover has been negative. This has nothing to do with the introduction of GST—in fact, there has been some improvement in their operations in the September quarter.

This improvement is also seen among the larger companies.

As a matter of fact, it has consistently been the case that the very smallest companies have performed the worst, the middle ones have given a middling performance, and the largest have done the best.

That is hardly surprising since, presumably, the bigger companies have grown bigger because they were more efficient in the first place.

Sector wise, smaller-sized companies operating in real estate, automobile and infrastructure saw their profits decline the most in the September quarter.

Real estate activity slowed down after implementation of the Real Estate (Regulation and Development) Authority Act, 2016, or RERA, in May this year.

Given the diverse factors impinging on the operating performance of companies, the only way we could surmise that GST had hit their operations was if the performance of smaller companies had been hit during the September quarter, while larger companies weren’t affected.